A savings account maintained by the condo corporation to pay for major repairs and replacements of common elements -- things like the roof, elevators, parking garage, and windows. A portion of each owner's monthly maintenance fees goes into the reserve fund. Ontario law requires regular reserve fund studies to ensure the fund is adequately funded.
Why It Matters
A well-funded reserve means the building can handle major repairs without surprising owners with special assessments. An underfunded reserve is a red flag that should make any buyer pause. Check the reserve fund balance and the most recent reserve fund study before committing to a condo purchase.
Real-World Example
A 15-year-old, 300-unit condo tower near Square One in Mississauga has a reserve fund balance of $4.2 million. The latest reserve fund study projects the building will need $6.5 million over the next 10 years for elevator modernization, window replacements, and garage waterproofing. Because the fund is underfunded by roughly $2.3 million, the board votes to increase monthly contributions by 12% annually for the next three years. An owner paying $650 per month in maintenance fees sees their contribution jump to over $900 within three years.
Ontario & GTA Context
Ontario's Condominium Act requires every condo corporation to maintain a reserve fund and conduct a reserve fund study at least every three years. The study must be performed by a qualified engineer or reserve fund planner and must project costs for the next 30 years. If the fund falls below the recommended threshold, the board must increase contributions or levy a special assessment. There is no provincial minimum balance requirement, so adequacy depends entirely on the building's specific needs.
How It Works in Practice
When reviewing a status certificate, compare the current reserve fund balance to the recommended balance in the most recent reserve fund study. A fund that is 75% or more of the recommended level is generally considered healthy. Below 50%, expect fee increases or special assessments in the near future.
Common Questions
What is a healthy reserve fund balance for a condo?▾
How often are reserve fund studies done in Ontario?▾
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